9. Net Earnings (Loss) per Share

In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method, unvested share-based payment awards that contain rights to receive non-forfeitable dividends are considered participating securities. The Company’s unvested restricted shares and unvested restricted stock units granted prior to July 15, 2015 and shares issuable under the Company’s deferred compensation plan are considered participating securities. Cash dividends to restricted stock units and performance-based stock units granted on or after July 15, 2015 are not distributed until and except to the extent that the restricted stock units vest, and in the case of performance-based stock units, until and except to the extent that the performance metrics are achieved or are otherwise deemed satisfied. Stock options do not receive cash dividends. As such, these awards are not considered participating securities.

Basic earnings per common share are calculated by dividing the net income, adjusted for preferred dividends and income allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted net income per common share reflects the dilution that would occur if any potentially dilutive instruments were exercised or converted into common shares. The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock method or two-class method. Other potentially dilutive securities include preferred stock, stock options, restricted stock units granted after July 15, 2015, and performance-based stock units and are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods.

During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. Due to the net loss during the 13 weeks ended July 30, 2016 and August 1, 2015, participating securities in the amounts of 1,386,935 and 2,694,632, respectively, were excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive. The Company’s outstanding non-participating securities consisting of dilutive stock options of 87,239 and 141,897 for the 13 weeks ended July 30, 2016 and August 1, 2015, respectively, and accretion/payments of dividends on preferred shares were also excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive.

The following is a reconciliation of the Company’s basic and diluted loss per share calculation:


	13 weeks ended
	July 30, 2016			August 1, 2015
Numerator for basic loss per share:
Net loss from continuing operations attributable to Barnes & Noble, Inc.	$	(14,416	)		(7,751	)
Less allocation of dividends to participating securities		(203	)		—
Inducement fee paid upon conversion of Series J preferred stock		—			(3,657	)
Preferred stock dividends paid in shares		—			(1,783	)
Accretion of dividends on preferred stock and membership units		—			(4,204	)

Net loss from continuing operations available to common shareholders	$	(14,619	)		(17,395	)
Net loss from discontinued operations available to common shareholders		—			(27,123	)

Net loss available to common shareholders	$	(14,619	)		(44,518	)

Numerator for diluted loss per share:
Net loss from continuing operations available to common shareholders	$	(14,619	)		(17,395	)
Net loss from discontinued operations available to common shareholders		—			(27,123	)

Net loss available to common shareholders	$	(14,619	)		(44,518	)

Denominator for basic and diluted loss per share:
Basic and diluted weighted average common shares		72,903			65,547
Basic loss per common share:
Loss from continuing operations	$	(0.20	)		(0.27	)
Loss from discontinued operations		—			(0.41	)

Basic loss per common share	$	(0.20	)		(0.68	)

Diluted loss per common share:
Loss from continuing operations	$	(0.20	)		(0.27	)
Loss from discontinued operations		—			(0.41	)

Diluted loss per common share	$	(0.20	)		(0.68	)